Pension Credit Changes

(Limited Text - Ministerial Extracts only)

Wednesday 24th April 2019 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Glasgow South West (Chris Stephens) on securing a debate on this important issue.

The Government believe that work is the best route out of poverty. Our reforms of the welfare system are designed to help people into work, make work pay and provide support for those in need. Those are the principles that underpin universal credit—the most significant change to the welfare system for decades—and are the context for the changes we are talking about today.

Single people can claim pension-age benefits only when they have reached state pension age. However, a person under state pension age who has a partner over that age can currently receive benefits intended to support economically inactive pensioner households, without having to meet any work-related conditions. That runs counter to our aim of encouraging people of working age to remain in the labour market and continue saving for their retirement.

As part of the reforms introduced by the coalition Government in 2012, the Welfare Reform Act 2012 set out that a couple will be able to access pensioner levels of means-tested support only when both partners have reached state pension age. In response to one of the hon. Gentleman’s first points, we have been clear that the change will not be introduced until the roll-out of new claims to universal credit is complete. That roll-out was completed earlier this year; consequently, on 14 January we announced that we will implement the mixed-age-couples change with effect from 15 May.

I will try to address all the hon. Gentleman’s points. Regarding the change being made by a written statement at a particular time, the changes to pension credit that commenced following the order made on 14 January were fully debated on three occasions during the passage of the Welfare Reform Act, and were voted on in Committee. The powers under which the order was made do not require the order to be subject to any further parliamentary scrutiny, since it brings into force primary legislation that Parliament already agreed should be implemented by a commencement order.

[Ruth George]

When the changes were debated back in 2012 as part of the Welfare Reform Act, universal credit was still a similar level of benefit to tax credits. Since then, following the 2015 budgetary changes, universal credit has been worth significantly less, and increased numbers of people on universal credit are in poverty. Does the Minister not agree that that should be a reason for Parliament to debate again the changes that will affect hundreds of thousands more, often vulnerable, households, in the light of the changed circumstances?

--- Later in debate ---

[Guy Opperman]

With respect, Parliament has debated the matter and made a decision. The hon. Lady will be aware of the 2011 equality impact assessment, the 2012 risk assessment, the universal credit impact assessment, and the ad hoc statistical analysis published on 28 February, which outlined the number of people affected, as the hon. Gentleman mentioned—approximately 115,000 mixed- age couples in the United Kingdom.[Official Report, 16 May 2019, Vol. 660, c. 4MC.]

[Chris Stephens]

I want to come back to the ministerial statement. There have been various changes to the political make-up of Parliament since 2012. There must be at least 200 new MPs since then, and I think they would want to consider the change, particularly in the light of other benefit changes, as the hon. Member for High Peak (Ruth George) said. Did the Department consider a fresh debate? The Minister mentioned the quality impact assessment. Could he tell us whether a fresh equality impact assessment was made this year prior to the announcement on 14 January?

[Guy Opperman]

I cannot go back to the specific debates in 2012 and say chapter and verse what was discussed at that stage, but it is a relatively normal procedure for this House to legislate on matters that will be contingent on a written ministerial statement or a commencement order. That standard practice was followed in this case. I am not aware of a fresh equality impact assessment being done. The equality impact assessment was done in respect of the Welfare Reform Act.

[Ross Thomson (Aberdeen South) (Con)]

It is interesting to listen to hon. Members. I often find that the SNP tend to weaponise welfare issues to make the charge for independence. My understanding is that powers have been devolved to Scotland under the Scotland Act 2016. Could the Minister confirm what powers are available to the Scottish Government to address this issue? Has he had any constructive discussions with the Scottish Government on the issue that the hon. Member for Glasgow South West (Chris Stephens) raises? I understand that they are pushing back the use of those powers until 2024. Does the Minister agree that rather than giving her sixth statement on indyref2 today, perhaps the First Minister should make a statement about how she will use her powers to address the issue?

[Guy Opperman]

I will deal with that point and then perhaps return to it in more detail later. I accept that there are other points relevant to this debate, but it is inevitable that devolution will come up when one discusses welfare with a colleague from the Scottish National party and other Scottish colleagues. Certainly, it has come up in relation to the campaigns on the state pension age.

My hon. Friend will be aware of two facts in particular. First, Jeane Freeman, who was my opposite number as the Scottish pensions Minister, wrote to my predecessor on 22 June 2017 concerning the powers under sections 26, 28 and 24 of the Scotland Act. Of particular interest is section 26, about which she wrote:

“This power is limited to providing help with ‘short term needs’, and those needs must require to be met to avoid a risk to a person’s wellbeing. That would not readily allow assistance to the majority of the women affected by the acceleration of the increase in their State Pension Age. Their needs and the risks to their well-being would have to be assessed individually.”

She also dealt with the creation of a new benefit under section 28, which is a possibility, and the top-up of reserved benefits under section 24, which is a wide-ranging power to make discretionary payments.

That deals with the original point in 2017. The point can then fairly be made that if the Scottish Government disagree with any of the UK Government’s welfare reforms, they have powers to do something about that in Scotland. I want to make it absolutely clear that, in addition to the substantial support that the UK Government are providing, the Scottish Government have significant new powers available to them to tailor welfare provision for people in Scotland. Although pensions themselves are very definitely a reserved matter, the Scotland Act gives the Scottish Government the ability to use a wide range of new welfare provisions.

I was asked specifically whether I have been engaged with by Scottish Ministers who seek to provide specific top-up support for mixed-age couples. I have not been made aware of any such information being provided to me. Frankly, it is not for the UK Government to do that. If the Scottish Government wish to do that, the ball is in their court, given their powers under the Scotland Act. Clearly, that is a matter for the hon. Member for Glasgow South West to take up with the Scottish Government at Holyrood.

Let me return to the change itself, which ensures that the younger partner has the same work incentives as others of the same age. Those claiming universal credit have access to tailored support from work coaches to help them find work, and universal credit is designed to ensure that work always pays, which is not the case for pension credit.

Let me try to address the specific point raised by the hon. Member for High Peak (Ruth George). First, I endeavoured to address her emails of 10 and 11 April, which arrived shortly before Easter and were looked at by the Department over Easter. I have written her a letter. We exchanged comments before the debate, and I accept that she has not received that letter. I signed it off late yesterday afternoon, on my first day back in the Department; to be fair to the Department, there is no criticism of it whatever. I also wrote a letter to the hon. Member for Glasgow South West, but we managed to get that to him in time.

I am conscious that the hon. Lady raised a specific fault. I am happy to put it on the record that there was an acceptance that that was a fault, and that, as of 18 April, it has been fixed. The reality of the situation is that the calculator provided the wrong outcome in one particular instance—for couples where one member is in receipt of carer’s allowance and the other retains an underlying entitlement to carer’s allowance. I will leave her to look at the specifics of the letter when she receives it later today. I am grateful to her and the Derbyshire team for bringing the issue to our attention. It has been rectified, and I hope the position on that matter has been addressed.

The hon. Lady raised a separate issue about pension credit generally. It is entirely the case that we are attempting to encourage people to be in a position to take up pension credit in a particular way, and there most definitely is a desire for that to happen. All 115,000 existing mixed-age couples involved were written to subsequent to the decision being made in January. Although I do not have a regional breakdown of that figure, 8,000 people will potentially be affected in Scotland. I do not have localised figures for the hon. Lady’s area.

I want to stress that the change does not in any way affect entitlement to state pension or the level of state pension. Mixed-age couples who are already receiving pension credit or pension-age housing benefit on 14 May will not be affected for as long as they remain entitled to either of those benefits. As I said, we have written directly to those couples to inform them of the change. The change therefore will apply mainly to working-age couples currently claiming means-tested benefit, or to mixed-age couples who apply for benefit only after the date of the change.

[Chris Stephens]

I thank the Minister for giving way again; he is being very generous. On the calculations, has he had any meetings with Age UK or Age Scotland, which indicate that people could be £7,000 a year worse off as a result of the change?

[Guy Opperman]

Age UK has met repeatedly—as recently as last month, as I understand it—with civil servants and special advisers in the Department for Work and Pensions. It is almost impossible to state what a future calculation will be without taking into account whether the individual will apply for a job and what their allowances for caring responsibilities and their other entitlements will be. There is a requirement and a desire for universal credit to incentivise and reward paid work, while pension credit is intended to provide long-term support to pensioner households who have left the labour market permanently through retirement.

[Ruth George]

Will the Minister address the point about carers in households that have had a letter about their pension credit? What will be done for them?

[Guy Opperman]

I will write to the hon. Lady on that point. I will ensure that she has an answer within seven days. I accept that we did not get a letter to—

[Ruth George]

It is the people affected I am worried about, rather than the response to me.

[Guy Opperman]

Well, I will write to the hon. Lady on that point, because I want to address the point made by the hon. Member for Glasgow South West, whose debate this is, about pensioner poverty. He criticised the Government in that respect, but I would push back on that.

We are forecast to spend £120 billion on benefits for pensioners in 2019-20, including £99 billion on the state pension. He will be aware that, by reason of the triple lock, from April 2019 the yearly amount of the basic state pension will be around £675 higher than if it had just been uprated by earnings since April 2010, and that the value of the full state pension as a proportion of average earnings is at one of its highest points since the late 1980s.

I could go on about the number of people in employment, which has risen dramatically, the increases in state pension and the successes of automatic enrolment in the employed sphere, but I thank the hon. Gentleman for the opportunity to address this matter. If I have missed anything, I will of course write to him.

Question put and agreed to.